TaxTMI 
TaxTMI 
2010 (10) TMI 663
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....hillon v. CIT, pertaining to the assessment year 2005-06 and the substantial questions of law proposed in the memo of appeal, shall be referred until and unless specific reference is made to the other tax cases. 4. The appellant/assessee has preferred this appeal (Tax Case No. 98 of 2010) on the following substantial questions of law : "1. Whether survey under section 133A can be conducted at the airport on a person getting out of aircraft instead of search under section 132(1)(B)(iia) exclusively provided for such circumstances and if not, whether the survey and all the subsequent proceedings which followed such survey are valid, specifically keeping in view the law laid down by the hon'ble Supreme Court in the case of Union of India v. Ajit Jain [2003] 260 ITR 80 ? 2. Whether in the facts and circumstances of the case, the assessment order was made on the basis of instructions and dictates of other authorities and if so whether such assessment is not bad in law ? 3. Whether the order of the learned Tribunal is perverse with respect to restoring the issue of addition of Rs. 24,85,000 being cash found in the possession of the appellant, particularly when the sources of ....
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....d by the income-tax authorities. His explanation that he withdrew the above sum from his wife's cash balance from M/s. Carol Barter (P) Ltd. was disregarded. 6. The assessee filed return of income for the assessment year 2005-06 on November 23, 2006 showing total income of Rs. 28,94,020 and agricultural income of Rs. 85,000 and the assessment was completed on a total income of Rs. 5,68,78,983. This assessment followed the assessment under section 153A for the preceding six assessment years. The Assessing Officer also issued notice under section 153C read with section 153A of the Act on February 16, 2005. An objection was raised by the assessee on the ground that the above notices were issued without requisite satisfaction and subsequently, the objection regarding lack of jurisdiction was agitated before the Commissioner of Income-tax (Appeals) (in short "CIT(A)") under section 144. However, the assessee filed return of income under protest. The Assessing Officer issued notices under sections 143(2) and 142(1) and again issued another notice under section 153A read with section 153C on September 4, 2006. 7. The Assessing Officer did not entertain the explanation of the assesse....
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....8,78,983 under section 153A. It has been also directed to charge interest under sections 234A, 234B and 234C and separate penalty proceedings under section 271(1)(c) of the Act. 10. The assessee preferred an appeal against the above order of the Assessing Officer. The Commissioner of Income-tax (Appeals) rejected the objection of the assessee regarding conducting survey under section 133A on the person of the assessee at Raipur airport and converting the survey into search under section 132 of the Act and the contention of the assessee that assessment was not done independently by the Assessing Officer, but at the instructions and dictates of other authorities. The Commissioner of Income-tax (Appeals), however, deleted the addition of Rs. 24,85,000 which was seized from the assessee at the airport by accepting his explanation in this regard and further deleted the addition of Rs. 85,000 and directed the Assessing Officer to treat the above income as agricultural income. The Commissioner also deleted the addition of Rs. 4,72,31,310, which was added as undisclosed income allegedly earned in the names of benamidars. Referring to the reasons detailed in the appeal order for the asse....
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....and the same is contained in the order-sheet and notice has been issued after application of mind. The subsequent notice was issued as a matter of abundant precaution and there is no bar for issuing second notice. Fresh notice under section 153C supersedes the earlier proceedings. Accordingly, the finding of the Assessing Officer, which has been subsequently confirmed by the Commissioner of Income-tax (Appeals) has been further confirmed. (3) Rejecting the alternative stand of the assessee that papers were found from the premises of Manharanlal Verma, who has been projected as excise consultant of all benamidars of Trilok Singh Dhillon, it has been held that all the assessees of Trilok Singh Dhillon group were his benamidars, including Manharanlal Verma. Manharanlal Verma was one of his trusted employees for the past several years and he was also handling bank accounts of all benamidars and family member of Trilok Singh Dhillon and no such consultancy activity was done by him. Accordingly, the Tribunal rejected the claim of Manharanlal Verma being an excise consultant. (4) Repelling the argument of the assessee that protective assessment is not permissible under section 153C,....
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....Bhilai where his second statement was recorded. The Assessing Officer has admitted that the survey was conducted at the airport for the purposes of verification of the cash. However, no document according legal sanction under which the assessee was intercepted at the airport has been filed, which was necessary as per the proviso to section 133A(6), which mandates approval of the Joint Director. No reason has been shown for avoiding action under section 132(1)(B)(iia). Since the matter was not considered within the ambit of section 132(1)(c) at the initial stage while intercepting the assessee at the airport, resorting to the same provision subsequently after survey was not called for as there was no change in circumstance. From the above fact, it is clear that the survey at the airport under section 133A is without jurisdiction and therefore, all other proceedings which followed invalid survey are void, as held by the Supreme Court in the case of Union of India v. Ajit Jain [2003] 260 ITR 80. 13. The argument that validity of search cannot be decided by the Tribunal has no force as the same was never advanced before the forums below. The assessee had raised this specific issue i....
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....ey under section 133A was carried out. The assessee was accompanied to his office and he could not satisfactorily explain the nature of possession of cash found with him along with evidence and accordingly, survey was converted into search. In the impugned order, the Tribunal affirmed the above finding in appeal by the Commissioner of Income-tax (Appeals). The question for our consideration is-Whether the questions touching the validity of search conducted under section 132 of the Act can be agitated during the block assessment proceedings or in an appeal before the Commissioner of Income-tax (Appeals) or before the Tribunal against the impugned order ? 19. In the matter of Ajit Jain v. Union of India [2000] 242 ITR 302 (Delhi) ; [2000] 159 CTR (Delhi) 204 ; [2001] 117 Taxman 295, in a writ petition filed by the assessee, the issue before the High Court was validity of authorization issued by the Director of Income-tax (Investigation) under section 132(1) of the Income-tax Act and block assessment order passed under section 158BC on the same date. The authorization under section 132(1) by the Director of Income-tax and the assessment were challenged on the ground that there w....
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....tiated or books of account or other documents or any assets are requisitioned on or after the 1st day of January, 1997. Explanation 2.-For the removal of doubts, it is hereby declared that the authorization referred to in sub-section (1) shall be deemed to have been executed,- (a) in the case of search, on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorization has been issued ; (b) in the case of requisition under section 132A, on the actual receipt of the books of account or other documents or assets by the authorized officer." 23. The Division Bench of the Delhi High Court in the matter of M. B. Lal [2005] 279 ITR 298, considering the above deeming provisions contained in section 158BE, held that the validity of search proceedings cannot be examined in appeal filed before the Tribunal against the block assessmentand the remedy lies under article 226 of the Constitution. 24. In Paras Rice [2009] 313 ITR 182, the Punjab and Haryana High Court following the decision of the Delhi High Court in M. B. Lal's case [2005] 279 ITR 298, held that while hearing an appeal against the order of assessm....
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.... the forums below, we find that on the basis of search proceedings, notices under section 153C read with section 153A were issued to the assessee and thereafter, return was filed and assessment was completed and assessment order was passed. The assessee participated in the assessment proceedings and did not challenge the validity and legality of search and seizure proceedings initiated against him by filing any writ petition in the High Court. Therefore, following the decisions of the High Courts, referred to hereinabove, we are of the opinion that it was not open to the assessee to question the legality and validity of search and seizure proceedings during assessment proceedings before the Assessing Officer or in appeal before the Commissioner of Income-tax or the Tribunal. Accordingly, we reject the objection of the assessee in this regard. The second substantial question of law - Whether in the facts and circumstances of the case, the assessment order was made on the basis of instructions and dictates of other authorities and if so whether such assessment is not bad in law ? 28. Shri Rajeshwara Rao advancing the argument on this question, submitted that the above issue has....
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....ns, as alleged by the assessee. It appears that the appellant presumed that there might be some direction by the Investigation Wing in the appraisal report to complete the assessment in a particular manner. The appraisal report is a report furnishing a brief discussion of the result of search and the points required to be examined while completing the assessment. The discussion in the appraisal report is not a direction influencing the liberty of the Assessing Officer. The Assessing Officer is free to complete the assessment on the basis of materials available on record and on the basis of the appellant's explanation. There is no such direction as alleged by the appellant in the instant case. 31. The assessee, instead of referring to any specific paragraph in the order of assessment based on factual findings, has imputed biased approach at the dictates of other authorities, which has been rejected by the forums below after examination of the record. Thus, in our considered opinion, the question raised by the assessee is a pure question of fact that has already been answered by the forum below against the assessee. Third substantial question of law - Whether the order of the l....
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.... having elaborately detailed the circumstances leading to an inference that others were benamidars of Trilok Singh Dhillon, has recorded a finding of fact. The above finding of fact has been further confirmed by the Tribunal in its detailed order. After closely examining the assessment order, the order of the Commissioner of Income-tax (Appeals) and the impugned order of the Tribunal in this regard, we are of the opinion that the finding of fact arrived at by the Tribunal, which is a final court of fact, is based on uncontroverted material available on record, which cannot be termed perverse and therefore, no such substantial question of law, as proposed by the assessee, arises for adjudication by this court. Fifth substantial question of law-Whether the Income-tax Appellate Tribunal is legally correct in confirming the addition of Rs. 22,13,218 made under section 68 as unexplained cash credit, especially when the gift was received with the rider that if the same was not recognised as gift for any reasons, the same shall be returnable to the donor, whose identity and creditworthiness and genuineness of the transaction were substantiated by the appellant ? 35. Shri Rao argued ....
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....ts and circumstances of the case, the Income-tax Appellate Tribunal is legally correct in allowing the Revenue's appeal by way of summarily remanding the matter to the file of the Assessing Officer without passing a speaking order ? 38. Learned counsel for the appellants submitted that they do not want to press these issues, hence the same need no consideration. SQL No. 8 : Whether the learned Tribunal, in the facts and circumstances of the case, was legally correct in endorsing the order of the learned Commissioner of Income-tax (Appeals) regarding validity of the assessment made under section 153C, particularly when the notice under section 153C was issued before receipt of the seized material, when the issue of notice preceded the initiation of search under the provision of section 153C, when the notice was issued without recording requisite proper satisfaction, which was not possible without receipt of the seized material and when the second notice was issued without finally concluding the assessment proceedings set to motion through the first disputed notice ? 39. Shri Rao submitted that the Assessing Officer issued notices under section 153C of the Act on February 16....
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....ed on October 21, 2005, even prior to this, the Assessing Officer was having enough evidence to record satisfaction and the same is contained in the order-sheets. The satisfaction gives specific particulars of annexures to the seized material and the contents of the seized material, which shows that the Assessing Officer applied his mind before issuing notices. For the purposes of the proviso to section 153C, the date of receipt of material is the date of search. In this case, the material was received on October 21, 2005. However, there was no deviation in the particulars of the seized material recorded in the order-sheet and received physically. Thus, the satisfaction recorded earlier still holds good and a fresh notice under section 153C was issued by way of abundant precaution and there is no bar for issuing second notice. In the instant case, the Assessing Officer in the case of Shri Trilok Singh Dhillon and group is the same as the Assessing Officer having jurisdiction against the third person and therefore, there was no question of handing over the documents etc. to any other Assessing Officer as provided in sub-section (1) to section 153C of the Act. 43. On due considera....
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.... bank accounts to the Assessing Officer when the appellant filed his return under section 44AF ? 46. Learned counsel for the appellants submits that the appellants filed return of income for the assessment year 2005-06 under section 44AF. For filing return under the aforesaid provision, the assessee is not required to maintain books of account and the addition was made on the basis of entries contained in the bank passbook. However, the bank passbook cannot be regarded as the assessee's books of account, therefore, the addition is not justified. Finding 47. From a perusal of the order of the Tribunal, it is seen that in the case of Panchuram Deshmukh the Assessing Officer made addition of Rs. 9,44,000 as unexplained deposit in the bank account. In appeal, the Commissioner of Income-tax (Appeals) deleted the addition of Rs. 4,50,000 on the ground that the above amount was credited as the same was transferred from the assessee's current account, which was ascertainable from the bank account, and granted relief to that extent. The Tribunal upheld the order of the Commissioner of Income-tax (Appeals). Since similar issues arose in various other appeals filed by the Revenue, so....
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....correctness in case of other assessees, without just cause. 52. Similar view has been taken by the Supreme Court in the matter of CIT v. J. K. Charitable Trust [2009] 308 ITR 161 [2008] 220 CTR (SC) 105 ; [2008] 175 Taxman 251 ; [2008] 15 DTR 41. 53. Placing reliance on the principles of law laid down in the aforesaid judgments, it is argued that in the case of M/s. Shakti Traders, Durg, in identical circumstances, the decision of the Commissioner of Income-tax (Appeals) was upheld by the coordinate Bench of the Tribunal and the Revenue accepted the said decision and did not prefer appeal under section 260A of the Act and in such circumstances, the Tribunal ought to have referred the present set of appeals to the larger Bench under section 255(4) of the Act. Finding 54. The decision of the Tribunal is based on the material available on record in the present case and therefore, notice issued by the Assessing Officer under section 153C on the facts of the present case cannot be questioned on the ground that on similar facts, the Department accepted the decision of the Tribunal, whereby the order of the Commissioner of Income-tax (Appeals) holding that the Assessing Office....
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....Dhillon and the assessees were made partners to circumvent the new liquor policy of the State Government. Accordingly, this issue is also decided against the assessees and in favour of the Revenue. SQL No. 17 : Whether the order of the learned Tribunal, in the facts and circumstances of the case, is perverse with respect to rejecting the income from excise consultancy activity, particularly when the income was offered in returns regularly filed by the appellant before occurring of the search and accepted by the Assessing Officer under regular provisions ? Finding 58. This aspect has already been dealt with by the Tribunal while dealing with the cross-objection of the assessee with respect to validity of the notice under section 153C of the Act and subsequent assessment. We are in agreement with the reasonings assigned by the Tribunal on this issue. SQL No. 18 : Whether the order of the Appellate Tribunal was perverse with respect to restoring the issue raised in the appeal memo without considering the fact that no such addition was made by the Assessing Officer in the assessment order ? SQL No. 19 : Whether the order of the learned Appellate Tribunal, in the facts an....